Head Of US Telecom Regulator Speaks On Philosophy Of Risk

Tom Wheeler, the chairman of the US’ FCC, has laid out his approach to achieving dynamic markets ahead of a massive 4G spectrum auction

Tom Wheeler, the newest chairman of the US’ Federal Communications Commission (FCC), shared his personal philosophy on regulation on 9 January, during a speech at the Computer History Museum before Silicon Valley technorati (and some party-crashing hecklers).

Wheeler’s speech comes as the regulator prepares a massive auction of television spectrum for use by 4G networks in the US.

Risk and growth

Wheeler said his philosophy centres on risk and economic growth.

“Risk is what Silicon Valley embraces,” said Wheeler. “It is the lifeblood of innovation and investment. To eliminate risk would be to eliminate growth. But at the same time, there are some risks that are so big that they threaten to block competition and innovation, and thus block growth. Markets won’t work if these risks aren’t mitigated.”

Wheeler focused his speech on three important topics for the FCC as it works to “respond to the kind of pernicious risk” that prevents market dynamism. Or, put another way, as it works to encourage market growth, one of the FCC’s primary missions.

Working to soften some ears (though not the hecklers’, who called for radiation warning labels on phones and were removed from the event) Wheeler reminded the group that he’d spent the previous decade as a venture capitalist. For the sake of discussion, he said, “Let’s stipulate two things: Government isn’t always as smart as it thinks it is – and neither are entrepreneurs and innovators.”

Wheeler’s arrival at the FCC comes as the organisation readies itself for one of its most challenging task to date, the auctioning of wireless spectrum that television networks have agreed to sell off so that it may be repurposed by the wireless carriers; the latter are anxious for more spectrum with which to grow their 4G networks. A first auction will take place on 22 January, followed by a major auction in the fall and another in mid-2015.

‘Once-in-a-lifetime opportunity’

“That this is a once-in-a-lifetime opportunity is not hyperbole. The re-banding associated with this auction is hard enough. When it is done, the ability to do it again will be virtually nil. There will not be another round of broadcast incentive auctions,” said Wheeler, emphasising the enormity of the task and the need for the auctions to run perfectly.

Shortly after taking office, Wheeler pushed back the timeframe, to mid-2015, of the spectrum auction the carriers are most looking forward to, explaining the absolute necessity of perfecting and testing the software that will host the auction, as well as making “fact-based policy decisions in an open and transparent manner”. With such decisions yet to be pinned down, the carriers have spent more than the last year presenting the FCC with letters and research papers backing their particular opinions.

Wheeler took a “commercial break” during the spectrum policy portion of his talk to speak frankly about the need for his “friends in the broadcasting business” to take advantage of the “once-in-a-lifetime opportunity” to sell off their spectrum so lucratively. He also told those in the audience whose innovations depend on spectrum availability that encouraging their broadcaster friends to sell is also in their own best interests.

Wheeler’s second major point was about preserving the Network Compact and speeding the transition to all-IP networks. The Network Compact may be summarised, in Wheeler’s words, as the “timeless values” the FCC is organised around.

Transition to IP networks

The carriers are anxious to begin transitioning from old copper infrastructure to IP-based networks. But as the laws pertaining to the networks – things like the guarantee of being able to have a phone line no matter where one lives, to being able to contact emergency services and to be guaranteed privacy on one’s phone line – are tied to the copper networks themselves, they must be revisited as those networks disappear.

(Following Hurricane Sandy, parts of New York had an early, and unsatisfactory, experience with early, purely IP-based networks, suggesting there is still work that needs to be done.)

Finally, Wheeler broached the Open Internet, a topic that returned to headlines in recent days, following AT&T’s introduction of Sponsored Data plans. The plans let businesses pay for consumers’ mobile data costs when they visit a site, watch a video, or more; AT&T likens the offer to an 800 number, while critics say it’s a barrier to competition. Wheeler has said the FCC will look into the offer.

He then seemed to suggest that while he means to uphold justice, he has no interest in refereeing each swipe competitors take at each other:

Government intervention

“It may well be that the kind of offering AT&T has announced enables increased competition and increased efficiency – both things that benefit customers. It is not the sort of thing that should be prohibited out of hand. But, again, history instructs us that not all new proposals have been benign. There has to be some ability on the part of government to oversee, to assess and, if warranted, to intervene.

“Let me be clear about this. I am not advocating intervention unless there is an unmistakable warrant for it. I am not interested in protecting competitors from competition, nor am I interested in presiding over a festival of rent seeking. But I am committed to maintaining our networks as conduits for commerce large and small, as factors of production for innovative services and products, and for channels of all of the forms of speech protected by the First Amendment. We should not let these things be impaired.”

Wheeler closed his speech by imploring Silicon Valley innovators to get involved with the FCC and contribute their insights and technology to the “kind of ecosystem most conductive to technological process and dynamism”. It’s not too much to say, he concluded, “that the future depends on it”.